Bill Text: TX SB1063 | 2019-2020 | 86th Legislature | Enrolled
Bill Title: Relating to the operation of the Texas Property and Casualty Insurance Guaranty Association.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2019-05-31 - Effective on 9/1/19 [SB1063 Detail]
Download: Texas-2019-SB1063-Enrolled.html
S.B. No. 1063 |
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relating to the operation of the Texas Property and Casualty | ||
Insurance Guaranty Association. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 462.004(5), Insurance Code, is amended | ||
to read as follows: | ||
(5) "Impaired insurer" means a member insurer that is | ||
subject to a final, nonappealable order of liquidation that | ||
includes a finding of insolvency issued by a court of competent | ||
jurisdiction in this state or in the insurer's state of domicile[ |
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SECTION 2. Section 462.055(b), Insurance Code, is amended | ||
to read as follows: | ||
(b) The remaining board members, by majority vote, shall | ||
fill a vacancy on the board for the unexpired term of a director who | ||
serves as an insurance industry board member, subject to the | ||
commissioner's approval. The commissioner shall appoint a director | ||
to fill a vacancy on the board for the unexpired term of a director | ||
who serves as a public representative. | ||
SECTION 3. Section 462.059, Insurance Code, is amended by | ||
amending Subsections (a), (b), and (c) and adding Subsection (a-1) | ||
to read as follows: | ||
(a) Notwithstanding Chapter 551, Government Code, the board | ||
may hold an open meeting by telephone conference call [ |
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telephone conference call: | ||
(1) must be audible to the public at the location | ||
specified in the notice described by Subsection (c); and | ||
(2) must allow two-way audio communication during the | ||
entire meeting between the members of the board attending a meeting | ||
authorized by this section. | ||
(a-1) If the two-way audio communication required under | ||
Subsection (a) is disrupted during a meeting so that a quorum of the | ||
board is no longer able to participate, the meeting may not continue | ||
until the two-way audio communication is reestablished. | ||
(b) The meeting is subject to the notice requirements that | ||
apply to other meetings of the board of directors. | ||
(c) The notice of the meeting must specify [ |
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of the meeting [ |
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open to the public must be audible to the public at that location. | ||
The association must make an audio recording of the meeting. The | ||
recording of the open portion of the meeting must be posted publicly | ||
to the association's Internet website [ |
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SECTION 4. Section 462.207, Insurance Code, is amended by | ||
amending Subsection (b) and adding Subsection (c) to read as | ||
follows: | ||
(b) An impaired insurer's insured is not liable, and the | ||
reinsurer, insurer, self-insurer, insurance pool, or underwriting | ||
association is not entitled to sue or continue a suit against the | ||
insured, for a subrogation recovery, reinsurance recovery, | ||
contribution, indemnification, or any other claim asserted | ||
directly or indirectly by a reinsurer, insurer, self-insurer, | ||
insurance pool, or underwriting association to the extent of the | ||
applicable liability limits of the insurance policy written and | ||
issued to the insured by the insolvent insurer. | ||
(c) The association is entitled to recover the | ||
association's costs, expenses, and reasonable attorney's fees | ||
incurred in defending the association or an impaired insurer's | ||
insured against a claim brought in violation of this subsection by a | ||
reinsurer, insurer, self-insurer, insurance pool, or underwriting | ||
association, on that entity's own behalf or on behalf of the | ||
entity's insured, after the date on which the entity is provided | ||
notice by the association or otherwise of the provisions of this | ||
section applicable to the entity's suit. | ||
SECTION 5. Sections 462.212(d), (e), and (f), Insurance | ||
Code, are amended to read as follows: | ||
(d) In an instance described by Subsection (c), the | ||
association is entitled to assert a claim in the bankruptcy or | ||
receivership proceeding to recover the amount of any covered claim | ||
and costs of defense paid on behalf of the insured. A court shall | ||
award the association the association's costs, expenses, and | ||
reasonable attorney's fees incurred in seeking recovery under this | ||
section. | ||
(e) The association may establish procedures for requesting | ||
financial information from an insured [ |
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confidential basis for the purpose of applying sections concerning | ||
the net worth of insureds [ |
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subject to any information requested under this subsection being | ||
shared with any other association similar to the association and | ||
with the liquidator for the impaired insurer on the same | ||
confidential basis. If the insured [ |
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provide the requested financial information, the [ |
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association may deem the net worth of the insured [ |
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be in excess of $50 million at the relevant time. | ||
(f) In any lawsuit contesting the applicability of Section | ||
462.308 or this section when the insured [ |
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to provide financial information requested by the association | ||
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proof concerning its net worth at the relevant time and shall pay[ |
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expenses, and reasonable attorney's fees incurred in attempting to | ||
obtain the insured's financial information [ |
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SECTION 6. Section 462.303, Insurance Code, is amended by | ||
amending Subsection (b) and adding Subsection (c) to read as | ||
follows: | ||
(b) A judgment, settlement, or release described by | ||
Subsection (a) is not evidence of liability or of damages in | ||
connection with a claim brought against the association, an | ||
impaired insurer's insured, or another party under this chapter. | ||
(c) The association is entitled to recover the | ||
association's costs, expenses, and reasonable attorney's fees | ||
incurred in contesting a claim based on a judgment, settlement, or | ||
release described by Subsection (a) on the association's behalf or | ||
on behalf of an impaired insurer's insured after the date on which | ||
the party asserting the claim is provided notice by the association | ||
or otherwise of the provisions of this section applicable to the | ||
judgment, settlement, or release. | ||
SECTION 7. Sections 462.304(a) and (c), Insurance Code, are | ||
amended to read as follows: | ||
(a) The association shall handle claims through: | ||
(1) the association's employees or contract claims | ||
adjusters; or | ||
(2) subject to the approval of the commissioner, | ||
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facility under a servicing agreement or loss portfolio transfer | ||
agreement [ |
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(c) The association shall[ |
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facility[ |
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handling claims for the association. The association shall | ||
reimburse a servicing facility under this subsection in a manner | ||
that is consistent with the applicable servicing agreement or loss | ||
portfolio agreement[ |
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SECTION 8. Section 462.307, Insurance Code, is amended by | ||
amending Subsection (d) and adding Subsection (f) to read as | ||
follows: | ||
(d) Except as provided by Section 462.308 or 462.212, the | ||
association does not have a cause of action against the impaired | ||
insurer's insured for money the association has paid, other than a | ||
cause of action that the impaired insurer would have had if the | ||
money had been paid by the impaired insurer. | ||
(f) To the extent the association has a right to recover | ||
proceeds from the sale of salvage property related to a covered | ||
claim, the association's right to recover the proceeds may not be | ||
reduced in the amount of any pre-impairment costs, fees, or | ||
expenses related to the salvage property that are not part of a | ||
covered claim under Subchapter E. A person or entity in possession | ||
of salvage property subject to the association's right of recovery | ||
may not seek recovery from the association for any pre-impairment | ||
costs, fees, or expenses related to the salvage property that are | ||
not a covered claim under Subchapter E. | ||
SECTION 9. Section 462.308, Insurance Code, is amended by | ||
amending Subsection (a) and adding Subsection (d) to read as | ||
follows: | ||
(a) The association is entitled to recover: | ||
(1) the amount of a covered claim and the cost of | ||
defense paid on behalf of a person: | ||
(A) who is an affiliate of the impaired insurer; | ||
and | ||
(B) whose liability obligations to other persons | ||
are satisfied wholly or partly by payment made under this chapter; | ||
and | ||
(2) the amount of a covered claim for workers' | ||
compensation insurance benefits and the costs of administration and | ||
defense of the claim paid under this chapter from an insured | ||
employer or any successor entity to the insured employer under | ||
state, federal, or international law whose net worth on December 31 | ||
of the year preceding the date the insurer becomes an impaired | ||
insurer exceeds $50 million. | ||
(d) A court shall award the association the association's | ||
costs, expenses, and reasonable attorney's fees incurred in seeking | ||
recovery under this section. | ||
SECTION 10. Except as provided by this section, the changes | ||
in law made by this Act apply only with respect to a property and | ||
casualty insurance company that is designated as an impaired | ||
insurer on or after the effective date of this Act. The law as it | ||
existed immediately before the effective date of this Act applies | ||
with respect to a property and casualty insurance company that is | ||
designated as an impaired insurer before the effective date of this | ||
Act, and that law is continued in effect for that purpose. | ||
SECTION 11. This Act takes effect September 1, 2019. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I hereby certify that S.B. No. 1063 passed the Senate on | ||
April 11, 2019, by the following vote: Yeas 31, Nays 0. | ||
______________________________ | ||
Secretary of the Senate | ||
I hereby certify that S.B. No. 1063 passed the House on | ||
May 15, 2019, by the following vote: Yeas 146, Nays 1, two | ||
present not voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
Approved: | ||
______________________________ | ||
Date | ||
______________________________ | ||
Governor |